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Telecom Carriers Plug MPLS for the Enterprise

A Yankee Group report says U.S. carriers are making up for dwindling telecom revenue by plugging MPLS-switched IP VPNs, which lay the groundwork for VOIP between sites.

A new Yankee Group report predicts that U.S. carriers will increasingly promote MPLS (Multiprotocol Label Switching) VPN (virtual private network) services in their fight to recover revenue lost in enterprise voice.

The implications for VOIP (voice over IP) here are positive: Multinational corporations in particular will see uptake in VOIP as the carriers, or the enterprises themselves, layer voice services atop their MPLS data WANs (wide area networks).

The MPLS routing protocol is widely understood to provide the class-of-service differentiation needed to prioritize voice over data with sufficient fluidity and security.

"VOIP will continue to be supported on their MPLS backbone," said David Parks, senior analyst of U.S. telecommunications strategies at the Yankee Group and author of the report. And unlike ATM (asynchronous transfer mode) and frame relay—older, hub-and-spoke packet WAN technologies—MPLS forms a mesh network that realizes greater economies of scale with each additional corporate destination.

"MPLS inherently supports any-to-any connectivity," Parks said. Voice applications are traditionally peer-to-peer, requiring a high degree of connectivity. In ATM and frame networks, this has required companies to contract for additional permanent virtual circuits between branch offices that carry a lot of voice traffic between them. "In MPLS, you just connect each branch office into the MPLS cloud," Parks said.

According to the Yankee Group, most of todays VOIP deployments riding MPLS backbones are "roll-your-own" solutions. This is when enterprises direct and manage their own voice traffic over the WAN, using IP PBXes or VOIP gateways to reach across the network to other company sites.

The research firm has determined that about 10 percent of the voice traffic of enterprises with more than 500 employees already rides the WAN.

"As enterprises kick the tires and get comfortable with MPLS service, they start to layer voice atop their data networking, Internet access and disaster-recovery applications," Parks said. They may alternatively outsource the voice management and/or voice switching function altogether to the service provider.

They may additionally buy VOIP hop-on or hop-off gatewaying services from the international providers. This allows them to present local phone numbers to customers or suppliers wanting to reach overseas divisions, and it allows their phone calls, in turn, to ride the WAN or VPN as far as possible in the direction of their overseas destination.

Companies with offices that are more concentrated within specific U.S. regions may find more attractive pricing among the RBOCs (Regional Bell Operating Companies), which are also deploying MPLS while leveraging their own central offices for end-user access.

MCI and AT&T are actively migrating customers to MPLS, even though those same customers may buy frame relay and ATM services from them. In many cases, access to the MPLS service remains frame relay or ATM. The RBOCs (regional Bell operating companies), with a much smaller installed base of frame relay and ATM than the interexchange carriers, can aggressively court AT&Ts and MCIs customers without risking cannibalizing their own data business.